Today a myriad of electronic commerce services exist. One popular electronic service is the service of making payments to payees on behalf of payors. This service is often called an on-line payment service, though neither the payment request nor the payments themselves actually have to be made on-line. Provision of an on-line payment service includes a payor (customer of a payment service provider) directing the payment service provider, typically on-line, though it could be via telephone or another form of electronic communications, to make a payment on behalf of the payor to a payee (which may or may not be a customer of the payment service provider). These payments are often bill payments, though other types of payments are also common, such as person-to-person payments and payments for goods or services purchased via the Internet or other computing networks. Upon receipt of a payment request, the service provider makes payment to the payee on behalf of the payor. The assignee of the present application, CheckFree Services Corporation, is a pioneer in providing on-line payment services.
FIG. 1 depicts operations of a typical prior art on-line payment service. A payor 100 transmits a payment request to a payment service provider 105. The payment service provider 105 could be CheckFree or any other payment service provider. The payment service provider 105 receives the payment request, processes the request to determine a form of payment, and then pays payee 110 based upon the received payment request and determined form of payment. As shown, the determined form of payment can be check, draft or electronic funds transfer.
In making payments on behalf of payors, a payment service provider can make payments to a payee (that is, deliver funds) by one of several methods. Payment can be made by check drawn on an account associated with the payment service provider, can be made by a draft drawn on an account associated with the payor, and can be made electronically, as will be discussed further below.
As will be understood by one skilled in the art, electronic payments are more cost effective for both a payment service provider and payee than payments made by check or draft (paper payments). Paper payments have inherent disadvantages over electronic payments. Processing costs (including generation and handling) are higher for paper payments than electronic payments. Also, paper payments take longer to complete than electronic payments. Another disadvantage with paper payments is that such payments are not easily reversible, while electronic payments (based upon agreement with a payee) are. As a result of these disadvantages, it is preferable for payments to be made electronically.
For payment made by check or draft, remittance information (such as payor name, account number with the payee, etc.) is typically delivered to the payee along with the check or draft. For electronic payments, remittance information is typically delivered electronically. It should be noted that electronic remittance information can be part of an electronic payment, or a separate transmission.
An electronic payment is made by electronic funds transfer directly to a payee's deposit account from an account associated with a payment service provider. Typically, electronic payments are made to only large, sophisticated commercial payees, though other types of payees could certainly receive electronic payments. In one form of electronic funds transfer, CheckFree utilizes the Federal Reserve's Automated Clearing House Network (ACH). For payments made via the ACH Network, the payee provides CheckFree with information identifying the payee's deposit account maintained at a financial institution. CheckFree transfers funds to the payee's financial institution via the ACH Network, which in turn credits those funds to the payee's deposit account. CheckFree also transmits remittance information via the ACH Network to the payee's financial institution, which in turn delivers that remittance information to the payee. While fees associated with using the ACH Network are low, CheckFree's use of this payment channel is limited to those payees whose financial institutions offer remittance advice delivery service and who utilize their financial institutions' remittance advice delivery service. One drawback to the use of the ACH Network is that there is no available listing of all payees who are accessible via the ACH Network. Thus, the only payments that can be made to a payee by a payment service provider via the ACH Network are payments to those payees who have provided a payment service provider with deposit account identifying information.
For some electronic payments, CheckFree has utilized networks maintained by credit card companies, such as MasterCard's RPS service, and VISA's E-Pay service. In such payments, funds and/or remittance information move to a payee via a credit card company's network. This service has been attractive to many payees whose financial institutions do not offer a remittance delivery service. While fees charged by credit card companies for use of their networks are slightly greater than the fees charged by the Federal Reserve System, an advantage to such systems is that credit card companies routinely publish directories of all payees as well as the data required to send payments to those payees through the credit card networks.
There still remain payees who are not associated with financial institutions which offer remittance advice delivery service, not associated with any credit card company network, or simply choose not to utilize either of these services. In response, CheckFree developed its proprietary DIRECT SEND system in which CheckFree utilizes the ACH to send funds to the payee, but independently sends an electronic remittance data file to the payee. This innovation dramatically increased the number of payees receiving electronic payment from CheckFree.
The combination of electronic payments via the ACH Network, via a credit card network, and via the DIRECT SEND system account for the majority of payments made by CheckFree on behalf of payors. The remaining payments are typically made by either check or draft, a determination of which can be based upon risk processing methods.
Paper payments can be divided into two categories: payments to businesses without electronic remittance capabilities, and payments to individuals. There are varied reasons why these payees do not receive electronic payments, including, as discussed above, no relationship with financial institutions which offer remittance advice delivery service, no relationship with a credit card payment network such as MasterCard's RPS network or VISA's E-Pay network, as well as a low volume of received payments from CheckFree, making DIRECT SEND somewhat cost prohibitive, especially for individual payees. Accordingly, a need exists to overcome these barriers to increasing the number of payments made electronically to payees by payment service providers.
FIG. 2 depicts a typical payment processing system 200 maintained by a payment service provider. The depicted payment service provider system 200 could be associated with any payment service provider. System 200 includes a server 202, an electronic payee database 212, a rules database 210, and a memory 230. It will be understood that other components could be, and typically are, included in such a system 200, such as communications interfaces and other databases, though these components are not depicted in FIG. 2. It will also be understood that the memory 230 could store one or more of the various databases, as well as programming which drives the operation of the server 202, as well as other data processed by the server 202 and generated by the server 202.
As shown, server 202 is configured to receive payment requests 201, which each include at least a payment amount and information identifying a payee. This identifying information could be merely a payee's name, or could include further identifying information such as payee address, phone number, or payor's account number with the payee. If only a payee's name is supplied by the payor, it will be understood by those skilled in the art that the payor has previously supplied additional payee identifying information to the payment service provider. This information would be stored in memory 230.
Information identifying payees which can be paid electronically is stored in the electronic payee database 212. These payees have supplied deposit account information to the payment service provider such that the payment service provider can make electronic payments to these payees. For non-electronic payees, who currently receive paper payments, the process to become an electronic payee includes multiple steps, including supplying deposit account information as well as criteria for delivery of remittance information. This can be a time consuming endeavor that many payees have chosen not to participate in. According, a need exists for an enrollment technique to become an electronic payee which overcomes this barrier to increasing the number of electronic payees.
Upon receiving a payment request 201, the payment service provider's server 202, among other processing, determines if the indicated payee is included in the electronic payee database 212. That is, the service provider determines if payment to that payee can be made electronically. The process for determining if the payee is included in the electronic payee database 212 is driven by rules stored in rules database 210. The rules dictate combinations of payor and/or payee identifying information to use in determining if any given payee is included in the electronic payee database 212.
Large payees typically have multiple remittance centers. A remittance center is a location to which payments and remittance information from a payor to a payee are delivered. That is, for a large payee, a first payor may be required to remit payment to a first remittance center, while a second payor, perhaps geographically distant from the first payor, may be required to remit payment to a second remittance center. As shown in FIG. 3, the electronic payee database 212 includes information identifying multiple payees, i.e., payees 1-3. The stored information includes payee name 301 and information identifying one or more remittance centers 305. As shown payee one is associated with three remittance centers. Payee two is associated with a single remittance center and payee three is associated with two remittance centers. It should be understood that stored remittance center information identifies deposit accounts to which payment should be credited as well as locations, electronic or physical, to which remittance information should be delivered.
For a payee having multiple remittance centers, the payment service provider must determine the proper remittance center for a particular payor requesting that payment be made to the payee on his or her behalf. Rules stored in the rules database 210 are not only used to determine if a payee is included in the electronic payee database 212, but to determine the proper remittance center to which payments and/or remittance advice should be directed if an electronic payee has multiple remittance centers. These rules can be tailored for specific payees, based upon a specific payee's business rules.
In one implementation utilized by CheckFree, the rules are used to identify a proper remittance center based upon the payor's zip code. Thus, in its most simplistic form, a proper remittance center is selected based upon the zip code in which the payor resides. It should be noted that geographic location is not the only criteria available for determining a proper remittance center to which a payor should remit payment.
The rules database 210 can also store rules to identify electronic payees and/or identify proper remittance centers based upon unique payee name variations, payee account number structures, as well as payee account number ranges. Thus, for example, based upon a payee name supplied by a payor, a proper remittance center could be selected. Thus, a single company could be doing business under various names. Also, based upon the payor's account number with the payee a proper remittance center could be selected.
While the use of rules has been successfully utilized by payment service providers in identifying electronic payees and/or determining proper remittance centers, deficiencies have arisen in the use of rules. For example, certain payees do not have remittance centers based upon payor zip codes. That is, two payors residing in the same zip code may be associated with different remittance centers for the same payee. Also, often two or more electronic payees are physically located in the same zip code. And, many payees do not have, for example, standardized name variations which can be used to identify electronic payees and/or remittance centers or standardized payee account number structure or ranges which can be used to identify remittance centers. Accordingly, a need exists for a technique to identify information associated with electronic payees and/or proper remittance centers for which standardized rules cannot be utilized to do so.